Motivating with Measures: Accountability, Incentives and the Dark Side

The benefits and risks of using measures for motivation are amplified when employees are made accountable or incentivized.

Measurement and Accountability

Measurement is at the heart of accountability. In the dictionary, accountability has a neutral meaning: an obligation or willingness to accept responsibility for one’s actions. This is the denotative, or literal, meaning. In a work setting, the denotative meaning of accountability is a goal that defines who will do what by when.

Accountability in this sense is the basis of management by objectives  (MBO).  While MBOs were popularized in the 1950s, they remain a central element of most organizations’ annual performance appraisals. 

While some objectives are task-based, the best objectives are measurement-based. We have found that the most effective examples of accountability-based motivation use SMART goals—goals that are Specific, Measurable, Agreed upon, Realistic, and Time-bound. Describing expectations in terms of measures at the beginning of a project motivates performance. 

Accountability is a word often loaded with connotations. How would you feel if you were told in a business meeting that you will be held accountable? Queasy? The phrase suggests that you’re in trouble. This isn’t actually accountability—it’s scapegoating. This is a connotative meaning, and the connotations of accountability are negative. The fear of negative consequences can lead to all sorts of dysfunctional behavior.

If the meaning of the measures isn’t managed, then accountability is more likely to instill a culture of fear than it is to motivate employees and support the organization’s strategic goals. 

To motivate with measurement-based accountability, the meaning of the measure must be managed. Use measures to describe expectations before the employee works to achieve results.  Articulate both the formal, denotative meaning (how the measure works) and the connotative meaning (the implications for the employee).

• If you’re building a measurement system, remember that the connotations are probably more important than the measures. Consider how the measures will be seen by employees. Develop a list of actions employees could take to influence the data.  Be sure to include actions that the system intends to encourage as well as unintended actions. Adapt your system accordingly to especially encourage the intended and discourage the unintended.
• If you’re managing employee accountability with measures, be sure to talk with employees about both the denotative and connotative meanings. It’s important to develop a shared vision: This is a true leadership communication task.  If there is clear agreement on the meaning of the measure as well as the level of performance expected, accountability can be positive. 

Accountability is simply responsibility. Measurement can help top build responsibility for results and the rewards or consequences of the results.

Incentives and Measurement

If goal setting and accountability work, why not add incentives to make them work even better? Why not juice the motivation system? Many of us have worked, or currently work, in an incentive system. Sales people work on commission. Managers get bonuses and stock options.

There is a whole industry of compensation consultants trying to create incentives that work. Since the industrial revolution, we’ve been trying to get incentives right—and some of us are starting to wonder if incentives are just wrong.  

Research summarized by Daniel Pink suggests that incentives lead to lower performance in completing tasks that are complex or involve creative thinking. I’m sure we’ll find that this relationship is true in many circumstances. 

I am also sure there are many circumstances in which incentives lead to improved performance, even in complex and creative tasks. As with many aspects of human performance, there are complexities.

Life isn’t one-size-fits-all; there are individual differences and nuances of context that influence how incentives affect performance. Long-term goals, which are difficult to study experimentally, may work better with incentives.  Mr Pink presents the world in black and white; i am confident there are many shades of gray.

There is a bigger problem with linking incentives to measures, however.  Incentives, or consequences, have the tendency to put the focus exclusively on moving the needle—on affecting the data and the measure rather than addressing the underlying goal. Too much focus on the connotations of the measure, as opposed to the meaning of the measure, leads to gaming.

The Dilbert comic strip may seem ridiculous, but as is always the case in Scott Adams’ cartoons, absurdity reflects reality to an uncomfortable degree (many of his cartoons are based on real-life examples submitted by readers). Incentives can have unintended consequences, often encouraging employees to behave unethically. For example, if you were earning a subsistence wage as a packer for Green Giant, and the company announced that a bonus would be paid to every employee who could find and remove insect parts from packages of frozen peas, what would you do? Possibly what many of the employees did—bring insect parts from home to earn the incentive.

There are, of course, more troubling examples of the dark side of measurement-based motivation. In the sad story of system-wide cheating in Atlanta Public Schools, 178 employees, including both teachers and principals, are now suspected of inflating scores on standardized tests to earn the significant rewards that come with rapid improvements in school performance. Outright swindles, such as Bernie Madoff, are all too common.

In sales departments there are more subtle examples of gaming incentive systems. Sales departments have been known to count all sales in the current quarter toward commissions—even though many of the sales are not actually closed. 

Conclusion

It’s dangerous to rely too much on measures for motivation: The more you emphasize measures, the more apt the measures are to cause dysfunctional, even unethical, behavior.  If you need to use measures for accountability and incentives, be careful.  Measures can’t replace management; they are a management tool.  It is necessary to make sure that the measures are reasonable – not gamed – and that accountability is understood and positive. 

Human Performance Measures: Start of a Series

I’ve been working with people measures for more than 25 years. Nearly every day, I see strong reactions to these common leadership tools.  Some embrace measurement as a tool for positive change, and others are nervous. Some question the measures, and others hide behind the authority of the data. 

These reactions to measurement and data fascinate me. They also hold the key to getting results from measurement systems. 

When measurement systems work well, people develop understanding, gain insight, become motivated, and set new directions. Just as often, however, measures simply do not work. In these cases, people ignore the measures or build elaborate defenses to dodge, manipulate, or diminish the data.

Over the next few months I’ll be writing about how systems and people respond to measures of human performance and how organizations can get beyond negative reactions. This is a topic I’ve been researching for years, and it may be my strongest and most nuanced area of understanding. 

I started my career focused on measurement systems. I took enough graduate courses in statistics and methodology to work as a psychometrician, and my dissertation combined the disciplines of psychology and economics. 

As I matured and worked in the real world of organizations, I started to see that the value of measurement can be found less in precision and mathematical finesse than in communication and learning. The most elegant performance management system is useless unless it is genuinely called on to help people communicate, learn, and adapt. 

In other words, measures need to be applied to produce data; data needs to be reviewed and interpreted to be useful; and useful information needs to be considered in context if people are to learn and improve. 

I can say with confidence that measures and data alone will not change organizations or behavior. There are too many psychological, organizational, and social factors that can prevent measures from translating into learning and improvement.

As a society, we spend huge sums of money on human performance measurement—and we start measurement early. All of us are familiar with the U.S. public education system, which now tests every student in the third through eight grade annually. In a number of states, databases are being developed to link these test scores to school, teachers, and student demographic information. 

When we graduate from the public education system, we find that most large organizations rely on annual employee appraisal systems. A manager can spend a few months each year rating employees, summarizing the information, and providing feedback. 

Despite the intensity of the data-gathering, improvement is not obvious. Many are dissatisfied with the measurement systems.  As a result, these measurement systems are often re-imagined and implemented with great hope and promise, only to fail. I don’t think much of this activity and investment. Don’t misunderstand: I’m a fan of measurement, because it’s critical to precise feedback and growth. But I’m an advocate for thoughtful investment in measurement. I’ve seen its transformative power. 

The public education system is still experimenting with measurement systems, and will be for years to come. Some corporations rethink their annual appraisal systems regularly. 

Technological and social trends suggest that performance measurement will only increase. Some argue that this investment is inappropriate. Addressing the merits of this societal investment isn’t my purpose here. My purpose is to make sure that individuals, organizations, and society get more value from the investments that are made.

I have workable tools and tips to make sure all of this data yields some return. Paradoxically, I won’t spend much time writing about measures. As I’ve said, it’s not as much about the measures as how they are used. I hope you will find the posts in the following weeks useful.